The International Monetary Fund (IMF) has officially confirmed that Nigeria has completed the repayment of the $3.4 billion loan it obtained in 2020 through the Rapid Financing Instrument (RFI) to cushion the economic shock caused by the COVID-19 pandemic.
Nonetheless, the country remains liable for additional charges linked to the loan facility. According to reports, Nigeria still owes roughly $30 million in Special Drawing Rights (SDR) fees — an amount equivalent to ₦48.2 billion annually. This charge will persist for the next four years, eventually exceeding ₦190 billion.
Special Drawing Rights are reserve assets created by the IMF to supplement member nations’ official reserves. They represent potential claims on the freely usable currencies of IMF members.
Naturenex reports that although the presidency celebrated the clearance of the RFI loan, the news has stirred mixed reactions among Nigerians.
The Senior Special Assistant to the President, Otega Ogra, took to 𝕏 to broadcast the news, lauding Nigeria’s removal from the IMF debtors’ list. He described the development as a reflection of “Discipline, reform, and strategic reset by the Tinubu-Shettima administration in restructuring our finances for a more prosperous future.”
The government’s announcement, however, comes against the backdrop of sustained criticism over Nigeria’s rising public debt. As of December 2024, data from the Debt Management Office (DMO) pegged the country’s total debt at a staggering ₦144.67 trillion.
In a statement released on Thursday, May 8, on behalf of the IMF’s Resident Representative for Nigeria, Christian Ebeke, the financial institution clarified that while Nigeria has repaid the principal, it will continue to service related charges.
The IMF explained that the pandemic had severely impacted global markets in 2020, triggering plummeting oil prices, declining economic activity, and drastically reduced government earnings. To navigate this, Nigeria secured the $3.4 billion RFI loan.
Although the principal has been settled, Nigeria is expected to continue paying annual SDR charges estimated at around $30 million (approximately ₦48.2 billion) for several years.
The IMF confirmed: “As of April 30, 2025, Nigeria has fully repaid the financial support of about US$3.4 billion it requested and received in April 2020 from the International Monetary Fund (IMF) under the Rapid Financing Instrument to help alleviate the impact of the COVID-19 pandemic and the sharp fall in oil prices.”
The organisation further explained that these charges are incurred due to the gap between Nigeria’s current SDR holdings and its cumulative allocation.
“In line with the IMF’s Articles of Agreements, these charges, levied at the SDR interest rate, which is updated at the beginning of each week, apply to the difference between Nigeria’s SDR holdings (SDR 3,164 million) (US$4.3 billion) and its cumulative SDR allocation (SDR 4,027 million) (US$5.5 billion). The net payment of the charges stops when Nigeria’s SDR holdings reach the cumulative allocation amount,” the IMF noted.
While the IMF loan repayment signals a significant move, Nigeria’s overall debt burden remains a source of worry for economists and policy experts. By December 2024, Nigeria’s public debt had soared to ₦144 trillion, with projections suggesting a further increase, given the ₦13 trillion budget deficit projected for 2025.
The government may resort to fresh borrowing, particularly in light of volatile oil prices, to finance this shortfall. Currently, Nigeria owes substantial sums to multilateral bodies, including the IMF, World Bank, and African Development Bank (AfDB).
In 2024 alone, Nigeria spent $4.66 billion servicing external debts, up from $3.5 billion in 2023. Multilateral creditors accounted for the largest share of this figure, contributing $2.62 billion or 56 percent of the total.
Additionally, Nigeria has recently taken out over $8 billion in new loans from the World Bank. Experts caution that with growing debt obligations and the likelihood of future loans, Nigeria’s fiscal space remains tight.
Reacting to the development, Emeritus Professor of Economics, Ndubisi Nwokoma, noted that while the IMF repayment is commendable, it does little to alter Nigeria’s broader debt landscape.
“That has not changed the big picture, the big picture is still not a good or desired position.
“Government is still borrowing, we are indebted to many multilateral institutions, we are indebted to AfDB, World Bank, we are taking bilateral loans, so it doesn’t significantly change our debt profile and with the drop in the price of oil, it makes it more difficult for government to stay without borrowing, even though it has been made easier by the removal of fuel subsidy and the harmonisation of the foreign exchange market.
“This had made it easier for the government in terms of public finance and not to be under serious pressure, if there were still fuel subsidy the fall in price of fuel would have been a very big blow on public finance because basically we are talking about public finance, government has much money to play around with, so the triple down effect on the economy is not very strong, but in terms of fiscal sustainability for government, it’s an improvement.
“So nothing has changed on the part of the common man or the economy or inability to get the economy out of the woods but public finance, fiscal sustainability is being assisted with those earlier policies that took place in 2023 but drop in price of crude may make us go back to our borrowing ways, so not much has really changed,” he told Daily Trust.
In contrast, Dr. Oluseye Ajuwon, an economist at the African School of Economics in Abuja, commended the government’s repayment of the IMF loan, arguing that borrowing is a normal part of managing national economies.
“There is no nation that can do without borrowing, not even a developed country not to talk of a struggling economy like ours. However, we need to borrow responsibly.
“Borrowing responsibly simply means borrowing money for a project that will be able to repay the loan by itself, and spending the loan judiciously,” Ajuwon remarked.
Dr. Muda Yusuf, Director and CEO of the Centre for the Promotion of Private Enterprises (CPPE), emphasized the need for Nigeria to intensify efforts to lower its debt burden.
He stated: “However, I think we need to continue to double down on the reduction of our debts because given the current debt level and particularly given the current level of our debt service commitment and the amount of resources we are committing to debt service, I think it will help our fiscal sustainability, our debt sustainability if we work towards reducing the totality of our debt exposure especially external debt because from all indications, external debts are much more difficult to manage and service than domestic debts.”
Yusuf advised that Nigeria prioritise reducing both domestic and foreign debts.
“So the payment of these components of debt is a welcome development, it will in some sense reduce the burden of outstanding debts and we need to do a lot more of that and going forward, as much as possible, we should reduce our exposures, especially to foreign debts.”
He also stressed the importance of channeling borrowed funds into infrastructure projects that would improve productivity and economic growth.
“And utilisation of debts is also essential, debts must be committed to projects that would enhance the productivity in the economy and that should be our priority, and that is speaking largely to our infrastructure stock.
“We should prioritise infrastructure investment in our debt exposure, which is extremely important. I am also hoping that our fiscal consolidation objectives will be improved and better achieved with the current tax reform.
“We expect that the revenue administration would be much more efficient without necessarily putting additional burden on the citizens or businesses. If we are able to do that, then the pressure to incur more debt would reduce. We need to ensure that the cost of domestic debts is as low as it can be as well,” Yusuf concluded.
